The 5-4 decision came on the same day justices heard arguments regarding a nonsectarian Bible club for young children that met on school grounds, and a case about government limits to a political party's spending on its own candidates.

Yesterday's decision to overturn a Republican-backed act of Congress that curbed spending by the federally funded Legal Services Corp. (LSC), now frees lawyers from restrictions on the kinds of cases they may file for welfare clients or applicants, and ends an outright ban on challenges to the constitutionality of welfare laws.

"We must be vigilant when Congress imposes rules and conditions which in effect insulate its own laws from legitimate judicial challenge," the majority opinion said.

"The [law] prohibits speech and expression upon which courts must depend for the proper exercise of the judicial power. Congress cannot wrest the law from the Constitution which is its source," said the court opinion written by Justice Anthony M. Kennedy, joined by Justices John Paul Stevens, David H. Souter, Ruth Bader Ginsburg and Stephen G. Breyer.

A dissent by Justice Antonin Scalia - co-signed by Chief Justice William H. Rehnquist and Justices Sandra Day O'Connor and Clarence Thomas - attacked the ruling for "improper special solicitude" to the legal profession.

"It also displays, I think, the very fondness for `reform through the courts' - the making of innumerable social judgments through judge-pronounced constitutional imperatives - that prompted Congress to restrict publicly funded litigation of this sort," the dissenting opinion said.

The American Civil Liberties Union called the ruling an important victory.

"From the beginning it was apparent that the congressional attack on the legal services program was ideological and punitive," said Steven R. Shapiro, national legal director for the ACLU. "We hope it will encourage a reexamination of the other restrictions. . . ."

Other rules ban the LSC from political activity or using of federal funds in most criminal cases, for lawsuits involving elective abortion, school desegregation, military desertion or draft laws.

The 1996 welfare law was approved after a major battle to fulfill President Clinton's vow to "end welfare as we know it." During his administration, welfare rolls fell by nearly 60 percent with more than 8 million people cut.

Yesterday's decision could revive challenges to the restrictions that caused many liberals to turn on Mr. Clinton.

The case to recover welfare benefits lost by New York City grandmother Carmen Velazquez was brought by individual legal-aid lawyers and a coalition of nonprofit groups that generally supported Mr. …

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